Brian Lakamp is the President of Digital at Clear Channel, and is the product owner of iHeartRadio, which he characterizes as “the national consumer brand” of Clear Channel. In a wide-ranging phone conversation, we spoke with Lakamp about iHeart’s digital strategy, listening to radio in the car, the relationship with The Echo Nest, clear Channel’s partnerships with record labels, and operating in a “six-screen world.”
“iHeart is Clear Channel’s national consumer brand.”
iHeartRadio was front-and-center during last week’s earnings call, when the company announced that the service has 47-million registered users. “We were the fastest to reach 20-million registered users, and second only to Instagram to reach 30-million and 40-million,” Lakamp told us. “That puts us in rarefied air. It’s a great story, and you don’t get there without a great product.”
Does iHeartRadio track ‘active users,’ as Pandora does? “We track many things, and have a deep understanding of the user. We haven’t publicly disclosed that number.”
We were also curious about whether iHeart, which is currently ad-supported for free listening, will ever offer an ad-free subscription choice. “We consider it on an ongoing basis,” Lakamp said. “We haven’t made a commitment to it. It’s on the table.”
Noting that iHeart aggressively distributes its app in cars and mobile devices, we asked Lakamp whether the strategy is to be everywhere at once.
“Yes. But a better question is: What is the brand strategy? Look at Z100. Z100 is not a tower and transmitter. It’s a relationship with a set of consumers who have psychographic connection with Z100 — fans of hit music. For them, it’s about getting to Z100 whenever they want to. Our strategy is to be wherever consumers are, and to provide the most satisfying experience they can get on those platforms.”
“For us, the distribution strategy is one of reach. If you’re responsible for Coke, the last thing you want is for people to walk into a convenience store that only has Pepsi.”
Talking specifically at connected cars and digital dashboards, we asked: Is iHeart the FM dial of the future?
“No. I think it plays an important part of the future. If you look at the history of radio technology — AM, FM, satellite, streaming — they haven’t been technologies that replace one another, they’ve been technologies that add to one another. Every car has AM/FM radio. It’s a highly reliable connection. Turning on the radio is the second thing after turning on the car for most folks. You’re going to see that pattern continue for years. Of course there is a set of consumers who have a different profile. With iHeart we’ll continue to deliver an enhanced experience. So it’s both, not either/or.”
“We are now living in what I call a “six screen world”: web, smartphone, tablet, TV, auto and wearables. We are present on all those platforms.”
Like many streaming services, iHeartRadio uses The Echo Nest technology in its dynamic playlists and song recommendations. After The Echo Nest was acquired by music service Spotify, both Rdio and Rhapsody declared their intention to drop The Echo Nest as a music intelligence provider. We queried Lakamp about his intentions with The Echo Nest.
“The Echo Nest has been a partner for a couple of years. During that time we’ve had a decreased reliance on The Echo Nest as part of our custom algorithm. It is a contributor, but not a core driving part of that algorithm. Whether or not we continue in some fashion is to be determined.”
That answer implied other providers, plus internal development of the song-selection mechanics that every Internet radio service needs to have. Lakamp confirmed this: “As our users have grown, and as our own data science has evolved, along with data from our research team, and other third-party data — we have a robust and extensive model. It’s all highly proprietary. We’re proud of the sophisticated alogorithm that we bring to bear. Over time, as the sophistication has grown, our reliance on one particular component has decreased.”
Despite iHeart’s growing menu of features, Lakamp’s high-altitude view of the product is simple: “iHeart is really two things: your favorite live stations, and create-your-own stations. We have extended that with additional features, but that’s the core.”
We wanted to dig into the sequence of partnerships between Clear Channel and record label groups — agreements which include iHeartRadio in the distribution, finance, and promotional aspects of the deals.
“Those deals are about building a sustainable and long-term model by which radio and the record labels partner to develop artists and an economic model that makes sense for everybody,” Lakamp told us. “We have a tighter relationship, which gives us the opportunity to do promotion and surface new artists, and even re-introduce older talent in new ways.”
A more direct question about whether Clear Channel radio stations would pay performance royalties to partner labels (which they are not required to do in U.S. copyright law) took the conversation out of Lakamp’s realm as head of digital and iHeartRadio. But Clear Channel’s PR office sent this reply: “Though we cannot provide any specific financial details around our partnership with WMG, we can tell you that WMG shared in revenue from all platforms and we believe that the alliance will deliver greater overall revenue for these artists.”
To many observers, the deals between Clear Channel and record labels represent free-market opposition to government-set royalty rates. We asked Lakamp whether he thought market-negotiated solutions are the future. “In our ideal world, we would negotiate and come to a market-based resolution of all issues. We recognize that may not be possible in all cases. We continue to pursue both.”